S. 2059 — Keeping Obstetrics Local Act

This section requires each state (as defined in section 1101(a)(1) of the Social Security Act for titles XIX and XXI, i.e., Medicaid and CHIP) to conduct a study—not later than 24 months after enactment and every five years thereafter—on the costs of providing maternity, labor, and delivery services in applicable hospitals and to submit the results to the Secretary of Health and Human Services (HHS). Applicable hospitals are those where more than 50% of births (in the most recent year for which data are available) are financed by Medicaid or CHIP, or rural hospitals (as defined by the Federal Office of Rural Health Policy) averaging fewer than 300 births per year over the two most recent years for which data are available. State studies must include, to the extent practicable: (1) cost estimates for such services at applicable hospitals and at those that ceased providing labor and delivery services within the past five years, based on the two most recent years of available data; (2) analysis of how geographic location, community demographics, and local economic factors affect those costs; (3) payment amounts for such services under Medicare, state Medicaid and CHIP (fee-for-service and managed care), and private health insurance, by geographic location and hospital size; (4) comparative payment rate analysis relative to Medicare rates (per 42 C.F.R. § 447.203(b)(3)), other public programs, Medicaid managed care, and private insurers, including alternative payment methods (e.g., bundled payments, quality incentives, low-volume adjustments); and (5) evaluation of expected changes in expenditures or reimbursements over the next three years, using HHS methodology. This section further requires HHS to issue a public report within 12 months of each state's study submission compiling state results; to submit to Congress and publicly release, within three years of enactment, a report analyzing the first round of state studies with data collection recommendations; and to provide grants and technical assistance to small rural hospitals for study participation. For these purposes, this section appropriates $10 million for FY2026 to HHS for grants and technical assistance to hospitals described in the rural low-volume criteria (available until expended) and an additional $3 million for FY2026 for implementation (available until expended).

This section requires state Medicaid plans to provide, for fiscal years beginning with FY2027, payments for maternity, labor, and delivery services (i.e., specified inpatient, outpatient, and behavioral health hospital services related to maternity care or labor and delivery) furnished by eligible hospitals at not less than a minimum payment rate of 150 percent of the Medicare payment rate for FY2027 and, for each subsequent five-year period through FY2032, a cost-reflective rate informed by state studies (new SSA §1902(a)(13)(D) and (uu)). Eligible hospitals include rural hospitals, critical access hospitals, Indian Health Service or tribally operated hospitals, and others where at least 50 percent of births are qualifying (i.e., Medicaid-, CHIP-, or Medicare-paid; IHS- or Native Hawaiian-provided; or uninsured and unpaid by the patient); states identify such hospitals subject to HHS approval (SSA §1902(uu)). The section applies the same payment requirement to Medicaid managed care plans (amending SSA §1932(f)). (Thus, the provision seeks to ensure adequate reimbursement for obstetric services at targeted hospitals to help sustain maternity care access.)

This section increases the Federal Medical Assistance Percentage (FMAP) for state Medicaid expenditures on maternity, labor, and delivery services furnished by eligible hospitals (as defined in section 1902(uu)) for fiscal quarters beginning on or after October 1, 2026. It provides a 100% FMAP for the enhanced payment rate amount (i.e., expenditures attributable to the excess of the minimum payment rate required under section 1902(a)(13)(D) (or, by application, section 1932(f)) over the base payment rate, defined as the rate applicable to such services under the state plan or waiver as of January 1, 2025, increased by the percentage rise in the medical care component of the Consumer Price Index for All Urban Consumers from January 2025 to the prior month); provides an enhanced FMAP under section 2105(b) (i.e., the Children's Health Insurance Program matching rate) for the base payment rate amount (i.e., total expenditures minus the enhanced payment rate amount), unless that rate is lower than the state's otherwise applicable FMAP; and excludes such payments from territorial payment limits under section 1108(f) and (g). (Thus, eligible hospitals receive full federal reimbursement for maternity service payments above an inflation-adjusted 2025 baseline, up to the Medicaid minimum rate.)

This section amends Medicaid state plan payment requirements (42 U.S.C. 1902(a)(13)(A)) by adding a new clause (v) requiring that hospital rates take into account the situation of low volume obstetric hospitals (as defined in new section 1923A). It inserts new section 1923A after section 1923, which (1) requires states to submit a state plan amendment by October 1, 2026, providing annual anchor payments to low volume obstetric hospitals—generally, eligible hospitals averaging fewer than 300 births annually over the prior three fiscal years (or most recent three years of operation if closed last year), those with fewer than 300 births in the current year, or state-certified facilities essential for underserved populations (e.g., limited English proficiency or specific racial/ethnic groups); and (2) defines such payments to meet or exceed the Medicaid labor and delivery revenue floor (i.e., [delivery volume × per-delivery amount] + standby capacity amount, prorated by the hospital's Medicaid/CHIP delivery share). As background, low volume obstetric hospitals maintain labor and delivery services (inpatient/outpatient care identified by Secretary-specified ICD/CPT codes, including antenatal transfers) in rural and underserved areas but face closure risks from low volumes. The per-delivery amount is $10,000 for FY2028, indexed annually by the medical care CPI (with revisions at least every five years based on cost data); the standby capacity amount reflects minimum expenditures needed for 24/7 readiness.

This section applies to state child health plans under the Children's Health Insurance Program (CHIP) the Medicaid requirements in sections 1902(a)(13)(D) and 1905(kk) for (1) a minimum payment rate to eligible hospitals furnishing maternity, labor, and delivery services and (2) increased federal financial participation for state expenditures on such services (adding them to the existing list of applicable Medicaid provisions).

This section directs that any increased or additional payments to hospitals attributable to amendments made by this title be disregarded in determining (1) a hospital's eligibility for and amount of federally funded supplemental payments, including Medicare disproportionate share hospital (DSH) payments under section 1886(d)(5)(F) of the Social Security Act (42 U.S.C. 1395ww(d)(5)(F)) or Medicaid DSH payments under section 1923 (42 U.S.C. 1396r-4); and (2) the application of any federal upper payment limit on aggregate state payments to hospitals. (Thus, such new payments do not reduce eligibility for or amounts of other supplemental payments, nor do they count toward state upper payment limit thresholds.)

This section requires state Medicaid plans to provide pregnant individuals with full-scope medical assistance (not limited to pregnancy-related services, as previously required under SSA §1902(a)(10)(VII)) during pregnancy and for the 12-month period beginning on the last day of the pregnancy (previously optional under SSA §1902(e)(16)); adds a new state plan requirement at SSA §1902(a)(88) for compliance with §1902(e)(16); and makes conforming mandatory-language changes throughout §1902(e)(16). (As background, this applies to individuals eligible for Medicaid solely under the pregnancy categories at SSA §1902(l)(1)(A) (i.e., 185% FPL) and extends beyond prior prenatal, delivery, postpartum, family planning, and certain vaccine coverage.) This section further requires state CHIP plans to comply with Medicaid §§1902(e)(5) and (e)(16) (previously optional) and makes a conforming amendment to CHIP pregnancy-related assistance rules. The amendments take effect on the first day of the first calendar quarter one year after enactment, subject to exceptions for state legislation requirements and a state option for earlier implementation in any prior fiscal quarter.

This section establishes a new Medicaid state plan option, available beginning January 1, 2028, to provide coordinated maternity health home services to eligible pregnant individuals and individuals whose pregnancy ended within the prior 12 months (with services required through the 365-day period beginning on the last day of pregnancy). Eligible individuals must be enrolled in Medicaid for all covered services, not enrolled in a health home under existing sections 1945 or 1945A, and either pregnant or postpartum as defined. (As background, health homes provide patient-centered coordinated care, including care planning and service coordination, for targeted populations.) The Secretary must establish provider qualification standards, modeled on best practices (including those under Public Health Service Act section 330P grants), requiring demonstration of abilities to coordinate care, develop individualized care plans addressing maternity and postpartum needs (including social supports and behavioral health), coordinate with pediatric providers, and report data. States must pay designated providers, teams, or health teams for such services, treated as medical assistance with a 90% federal medical assistance percentage for the first eight fiscal year quarters of implementation; payment methodologies (specified in the state plan amendment) may use per-member-per-month amounts, prospective payments for federally qualified health centers or rural health clinics, or Secretary-approved alternatives, adjustable for pregnancy/postpartum risk severity and care coordination needs, and consistent with Medicaid economy and efficiency requirements. Participating hospitals must establish procedures to notify maternity health homes when treating eligible individuals.

This section directs the Secretary of Health and Human Services, not later than one year after enactment, to issue and publish guidance for states on options to support and improve access to coverage and payment under Medicaid or CHIP state plans (or waivers) for services provided by doulas, certified nurse midwives, certified midwives, or certified professional midwives—who meet or exceed International Confederation of Midwives education and training standards and are licensed in the state—and certain maternal health professionals specified by the Secretary. The guidance addresses such coverage (1) in rural areas, (2) across a continuum of care, and (3) among varied provider settings and payment and care models, including managed care.

This section establishes a 100% federal medical assistance percentage (FMAP) under Medicaid (SSA §1905(b)(5)) for state expenditures on depression and anxiety screening services provided to pregnant enrollees—at least one screening during the perinatal period using a standardized, validated tool and a full assessment of mood and emotional well-being (including screening for postpartum depression and anxiety) during the postpartum period—and excludes the additional territory payments from Medicaid payment limits (SSA §1108(f)-(g)). It increases the enhanced FMAP under CHIP by 1 percentage point (from the otherwise applicable enhanced FMAP) for such services provided to targeted low-income pregnant women (including pregnancy-related assistance under CHIP or via Medicaid §1903(v)(4)(A)(i)) during pregnancy and the 12-month postpartum period. The amendments take effect on the first day of the first fiscal quarter beginning on or after one year after enactment.

This section requires states to provide presumptive eligibility for pregnant women for ambulatory prenatal care under Medicaid (changing "may provide" to "shall provide" in section 1920(a) of the Social Security Act). (Presumptive eligibility allows qualified entities, such as participating hospitals, to temporarily deem individuals eligible for specified services during full Medicaid application processing.) It further requires such presumptive eligibility without regard to other optional programs (under sections 1920A, 1920B, or 1920C) and makes related state plan requirements mandatory (in section 1902(a)(47), previously listing pregnant women eligibility as mandatory with others optional). Conforming amendments update cross-references in sections 1920(e), 2107(e)(1)(R), and 2112(c) (changing "may elect" to "shall elect").

This section expands the deployment criteria under section 203A of the Public Health Service Act (42 U.S.C. 204a) to include "urgent maternal health care needs" (i.e., needs arising from hospital or facility closures, imminent closures, or loss of trained maternal health workers that impair access to prenatal, labor/delivery, postnatal, mental/behavioral, and reproductive health services, as determined by the Secretary in consultation with the Attorney General); adds a new category of urgent needs not rising to full emergency level; and defines the term. The section further authorizes the Secretary, under section 214 (42 U.S.C. 215), to detail Commissioned Corps personnel upon request by eligible entities (i.e., states, localities, tribes, nonprofits, or other health care entities) to address such needs resulting from closures or worker losses, with pay from Service appropriations (potentially reimbursable), service credited toward Corps benefits, and conditions including hiring/retention plans, patient transition plans, and workplace assessments. (As background, the Commissioned Corps is a uniformed service that deploys professionals to public health emergencies and routine needs in underserved areas.) The section also adds a new subsection (e) to section 203 (42 U.S.C. 204) directing the Secretary to enhance Commissioned Corps operations, including headquarters processes, force management and training for the Regular and Ready Reserve Corps and emergency strike teams, and recruitment/retention for underserved/vulnerable communities.

This section requires state Medicaid plans, effective January 1, 2028, to implement a streamlined enrollment process—without additional screening beyond that for in-state providers—for eligible out-of-state providers of maternity, labor, and delivery services (or orders or referrals for such services) located in neighboring states (as defined by the Secretary of Health and Human Services), enrolling them for 5-year periods (with revalidation available for subsequent 5-year periods unless terminated or excluded). Eligible providers must be determined by the Secretary to pose a limited risk of fraud, waste, or abuse; have been screened under Medicare provider enrollment rules or their home state's Medicaid plan; and not be excluded from Medicare or Medicaid. The section makes conforming amendments to Medicaid state plan requirements at Section 1902(a)(77) and (kk); applies the process to CHIP; and directs the Secretary to issue guidance by January 1, 2028 (with updates as needed), to state Medicaid and CHIP directors on best practices for screening and enrolling such providers, including in managed care plans.

This section amends Medicare provider agreement requirements (42 U.S.C. 1395cc(a)(1)) to require hospitals, beginning 180 days after enactment, to submit to the Secretary of HHS, relevant local and state agencies, and the community a notification at least 180 days prior to closing any obstetric unit, including (1) a report analyzing the closure's impact on the community, with data on adverse outcomes and increased obstetric service costs; (2) steps to identify other providers to address service gaps; (3) the closure's cause; (4) historic transportation costs for obstetric services in the community; and (5) additional information required by the Secretary. (Thus, hospitals must meet this condition to qualify for Medicare payments.) This section further amends Medicaid state plan requirements (42 U.S.C. 1396a(a)) to require states to publicly post on a relevant state agency website any hospital impact report received pursuant to the new Medicare requirement.

This section requires hospitals to include in Medicare cost reports, for cost reporting periods beginning on or after July 1, 2026, data relating to labor and delivery services, specifically (1) the number of births delineated by cesarean and vaginal; (2) the number of antenatal and postpartum transfers to other hospitals; (3) the number and characteristics of staff providing such services; (4) expenses incurred for such services, including nursing care, anesthesia, and operating room services; (5) amounts spent for on-call coverage by physicians and midwives; and (6) amounts and sources of revenue received for such services, including from Medicaid (title XIX), other health insurance or third-party coverage, and uninsured individuals.